Jean Tirole Proves Why Heterodox Economists are Essential to Save the Field

By William K. Black
February 12, 2017     Bloomington, MN (Part 3 in my Tirole series)

I discussed Jean Tirole’s 2001 article (“Corporate Governance”) and this remarkable admission about orthodox economists in my second article in this series.

The economists’ implicit assumption is that employees, suppliers, customers, and other natural stakeholders are protected by very powerful contracts or laws that force controlling investors to perfectly internalize their welfare…. [The] details of the argument have not yet been worked out.”  [p. 4]

I explained that this was a particularly pernicious example of “group think” that furthered the dominant ideology of orthodox economists (laissez faire) and served their self-interest in getting hired, published, honored, and advanced.  I explained that it was anti-scientific and failed Tirole’s test of what it took to be a scientist.  I noted that Tirole’s admissions also demonstrate the dishonest nature of his and his disciples’ attacks on heterodox economists and promised to discuss that point in this subsequent article.

Tirole’s attack on heterodox French economists consisted of the pure ad hominem description of them as a “motley crew” and the assertion that they represented academic failures because they had not published in the top orthodox journals.  The use of the phrase “motley crew” proves Tirole’s personal animus and the fact that he used the ad hominem attack as his first “argument” shows that he recognizes the weakness of his substantive arguments.

Tirole’s critique that heterodox scholars virtually never publish in the most elite orthodox journals is a devastating critique of orthodox scholars, not heterodox scholars.  The passage I quoted from Tirole demonstrates that he knows this to be true.  Orthodox economists believe so fervently in a utopian myth – refuted constantly by reality, but never rejected by these orthodox economists – that they:

  1. do not need feel any need to state their myth as an explicit assumption,
  2. have never demonstrated that their utopian myth comports with reality, and
  3. have never bothered to “work out the details” of their myths.

Heterodox economists do not believe these foundational myths of the orthodox canon and publish research demonstrating its falsity and the refusal of orthodox economists to “abandon” their foundational beliefs despite the fact that they “fail the test of reality.”  Tirole stressed in the same letter that denounced heterodox economists to the French educational minister that an economist who refused to abandon theories that fail the test of reality was not a scientist.  The heterodox critique is so threatening to orthodox economists because in addition to proving that their theories prove the fail the test of reality we prove that these orthodox economists are not scientists because they refuse to abandon their failed dogmas.

A top orthodox journal will not publish an article by a heterodox scholar making these points – for the reasons Tirole makes about their utopian myths.  The editors and the referees of the top orthodox journals will never approve the publication.  For Tirole to take this fact and pervert it into an attack on heterodox scholars is disingenuous.

The Tirole passage that I quoted to begin this article also refutes the efforts of Tirole’s supporters to define heterodox economists as science deniers.

The term “economic negationism” does not caricature the debate. We chose it because the notion of “scientific negationism” is an expression used in debates about science, and we are talking about science here.

We note that scientific negationism is a strategy based on four pillars:

  • Throw doubt on and castigate “la pensée unique” [doctrinaire, dogmatic “group think”];
  • Denounce moneyed and ideological interests;
  • Condemn science because it can’t explain everything;
  • Promote “alternative” learned societies.

This strategy aims to discredit researchers who are getting what are considered disturbing results.

In my first column in this series, I explained the obvious logical failure of Tirole’s acolytes.  Orthodox economists do not get to define themselves as a “science” and then define those who refute their utopian myths as science deniers.  Under Tirole’s own definition of what it takes for an economist to be a scientist, orthodox economists are not scientists.

Scientists, not science-deniers, criticize “doctrinaire, dogmatic ‘group think.’”  The opening quotation from Tirole in this article is a classic example of doctrinaire, dogmatic ‘group think.’  Economists believe incentives, including personal ideology and self-interest (pleasing wealthy sponsors), affect behavior.  Virtually all scientists “denounce” the corrupting influence of ideology and economic self-interest on research.  Scientists are heavily skeptical of research supported by firms or ideologues.  Scientists mandate disclosure of research funding that could pose any risk of bias.  Science deniers ignore these conflicts of interest.

Heterodox economists do not denounce science because it cannot explain everything.  The fourth pillar is equally farcical.  There are dozens of learned societies among economists.  Orthodox economists created the vast majority of these societies.  No orthodox economist ever claimed that having multiple learned economics societies constituted science denial.

Orthodox economists are determined to purge heterodox economists from the journals and the academy because heterodox economists keep documenting what orthodox economists consider “disturbing results.”  To return to my opening quotation from Tirole, the problem with orthodox economics is not that it produces “disturbing results.”  The problem is that orthodox economists rely on utopian assumptions, often implicit, that produce nonsense results that fail the test of reality.  The “results” have nothing to do with reality.  Mythical assumptions, not data, drive the orthodox results that purport to test their most fundamental theories.  Tirole’s acolytes aimed their “science deniers” label at heterodox economists, but they ended up demonstrating that orthodox economists are not only non-scientists, but also science deniers desperate to prevent the publication of heterodox scholarship in their top journals.

4 Responses to Jean Tirole Proves Why Heterodox Economists are Essential to Save the Field

  1. Orthodox laissez-faire economists are simply propagandists. But propaganda works. And non-laissez faire economists and politicians are doing very little, if any, successful marketing of the truth.

    So marketing/propaganda of lies wins. You can see that this is so, from the dominant news media (America’s most trusted news source), and from who has been elected to the presidency, Congress, state legislatures, and state governorships.

    Non Right Wingers are the real science deniers. We deny the science of marketing, and the fact that propaganda works. The U.S. is immersed in Right Wing economic and political propaganda, and it is working. And yet we sit around acting as if you can say the truth any old way, and to a very tiny audience of the choir we are preaching to. And we believe that that will make a difference in the world. Of course it does not.

    Libertarianism and laissez faire economics are just form of astrology for men. No evidence for then. But real evidence is not needed when fake news and propaganda rule. In the absence of other views on widely watched/read/listened to media, fake news rules.

  2. The discord between the orthodox and heterodox camps in economics is very disadvantageous for society as it appears to afford an opportunity for the wealthy elitist top portion (10%) of the US population to justify (to the unenlightened masses) their advantageous position with respect to those lesser advantaged members. If only someone/group (economist, psychologist, or other?) could awaken the general public somewhere in the world to the potential utility of MMT (or some better rational approach to economics) to facilitate a more constructive culture/society!

    Ironically, a somewhat similar situation exists in the disciplines of chemistry and physics as exemplified by differences among certain groups of physicists and physical chemists who have, since the 1980s, argued about hot versus cold fusion as phenomena to facilitate useful energy production. In a related controversy, the works of Dr. Randell L. Mills, President of Brilliant Light Power Company, may soon permit recognition/acceptance of the role of the hydrino to help explain some of the phenomena which have baffled theoretical chemistry, physics, and cosmology while facilitating commercial exploitation of that previously unknown particle to aid in production of heat to drive a photovoltaic device and thus facilitate recovery of utilizable electric power:

    http://brilliantlightpower.com/brilliant-light-powers-suncell-announced-on-cnn-international/
    https://www.youtube.com/watch?v=R0PYe-4090g

    Dr. Mills unique insights into physical chemistry, physics, cosmology, and engineering have enabled recognition of a novel solution to the worlds’ energy problems. Furthermore, not only does his work appear to discredit a major objective of quantum mechanical theory (string theory and/or others?), but it may define Dark matter, assuming the hydrino becomes generally recognized to become the ultimate non-polluting source of cheap electricity!

  3. David Harold Chester

    The economic truth is there simply because macroeconomics is scientific and logical in how it performs. Most of the politicians are so blinded as not to want to see the way the logic works, and even if they could see they would have a hard time recognizing what happens. For this reason we need:

    1. Specialists who understand macroeconomics in a way what the politicians can’t,
    2. Politicians who are willing to listen to them and to follow what these experts say and
    3. Idealistic majorities who seek properly shared wealth, and have put aside the greed that we otherwise would seek to satisfy.
    It seems to me that to meet these requirements would take a miracle? Do you know of any spare ones?

  4. In thinking about the potential for trying to convince TPTB that my preferred macroeconomics model will work to everyone’s benefit, my imagination indicates it would be very unlikely that any direct approach would likely fail. On the other hand, Dr. R L Mills faced the same problem in attempting to try to convince TPTB in hot fusion physics; he was able to ignore those skeptics and go his own way and the result of over 15 years of effort until he got the problems worked out and results are nicely summarized:

    https://www.youtube.com/watch?v=CtA4FdRrCkY

    I have wondered what might have been the outcome of the Pinochet regime in Chile if MMT or an idealized macroeconomic system had been substituted for the actual neoliberal monetarist scheme(s) and the population had been treated with some substance(s) – psychological and/or drug(s) to encourage willful participation. [Don’t take this sentence to reflect my preference, rather, it indicates the complexity of attempting to imagine a set of conditions which might facilitate a demonstration/test]. Dr. Wray and colleague(s) occasionally mention the experiment in Argentina iir, but that experiment was limited in scope, then discontinued for political reasons. I suspect that the di/perversely of the cultural inheritance of most adults makes a selection of a practice/trial experiment difficult. Currently, I cannot think of a way to control the minds of the general populace to encourage participation in such an experiment, however, maybe someone else can. The objective of my remarks relates to the importance of ‘thinking outside of the box’ in trying to overcome seemingly insurmountable obstacles.